It looks like a check, feels like a check, even cashes like a check. But the pink and blue slip with the $4 promise -- mailed to many Marylanders -- has an alter ego, as a contract enrolling unwary consumers for a $69.72 credit card protection service.
Maryland authorities have received more than 115 consumer complaints about the direct-mail offer by Lanham-based Credit Card Protection Agency (CCPA).
The service, which promises to help protect subscribers from charges on lost and stolen credit cards, is legal, according to U.S. postal inspectors and the state attorney general's office.
But authorities also said that such services carry little value for consumers, who are protected by a federal law limiting their exposure to the first $50 charged on each lost and stolen card.
"Consumers don't need that service. Credit card companies stand behind their cards, even waiving the $50 in most cases," said Postal Inspector Larry Fryer.
Here's how the offer works: fine print on the back of the check explains sign-up terms and is bracketed by a space for a credit card number and signature. The signature does double duty -- it endorses the check for cash or deposit, and authorizes a credit card charge of $69.72.
A spokesman for the company, which also advertises as Preferred Cardholder Division, said customers find value in the service. Company brochures claim about a million subscribers.
"People who carry a large number of cards value the convenience and piece of mind that comes from knowing they can notify card issuers and have new cards issued right away by calling one phone number," said Steve Klein, who identified himself only as a company executive. He added that CCPA has always honored its guarantee, which offers subscribers a full refund at any time.
The seven-year package also includes other services, such as a $100 emergency loan to stranded travelers, a list of no-fee and low-fee VISA and MasterCard issuers and a free credit report.
But such services are available in Maryland for little or no cost through credit card companies, consumer groups or government agencies. For example, the consumer group Bankcard Holders of America compiles a list of low-cost VISA and MasterCard issuers, available for $4. And in Maryland, residents are entitled by law to one free credit report each year, said a spokeswoman for the Maryland attorney general's office.
An official with the attorney general's office said that most of the complaints received about CCPA have been from residents worried that others would fall prey to the offer without realizing what they had committed to buying. "We urge consumers to think carefully about what service is really being provided and whether it is worthwhile to them. Anytime anyone sends you a check, it is important to see what cashing the check commits you to," said Rebecca Bowman, director of the complaint unit of the attorney general's office.
One Anne Arundel County resident who subscribed to CCPA's service later regretted it. "When I first noticed the charge on my credit card bill, I had no recollection of giving them my credit card number," said Dorothy Bartholomeo, a clerk in a Glen Burnie flower shop.
After the company produced a check with her signature and credit card number, she said she felt foolish. She had not expected to see a $69.72 charge on her credit card, she said. After she complained to her credit card issuer, the charge was eliminated.
Consumers often are not charged at all when credit cards are lost or stolen.
"We indemnify our cardholders against all losses due to fraudulent activity. Even below the $50 limit. We cover 100 percent of the loss, so we really see little need for this type of service," said a spokesman for Delaware-based MBNA America Bank, the world's largest issuer of Gold MasterCards.
MasterCard International moved at the beginning of the year to waive the $50 limit for all its cardholders, a spokesman said.
Howard Strong, a California lawyer who heads Credit Card Users of America, said that when he received the CCPA check he filed it under "credit card rip-offs."
"I tell people it's more effective to take the credit cards out of their wallets and photocopy them. If they're lost or stolen, you have all the names and numbers on one sheet of paper -- cost: about a dime," said Mr. Strong, author of "Credit Card Secrets."
He said the back of the CCPA check is misleading. "It's an attempt to trick people into signing up for their service," he said.
Managers at NationsBank, the bank on which CCPA checks are drawn, had a mixed response to inquiries about whether consumers could cash the checks without signing up for the $69.72 service.
At the Munsey Building branch in downtown Baltimore, customer service manager Grace Welsh said she would cash the check if a bank customer left the credit card authorization box blank.
But at the Light Street branch, a consumer banker said the bank would not cash the check unless the customer provided a credit card number.
Mr. Klein said checks that are cashed without a credit card authorization trigger a follow-up mailing asking if the consumer wants the service. If not, the consumer can keep the money, he said.